pensions

[Count Steer]

I just had a look at the moneysaving expert forum for anything relating to True Potential.

Their cost/performance may not be quite what they promise, but they do seem quite slick. Nothing horrendous but for example:

My long standing IFA joined True Potential 12 months ago. He completed my pension transfer etc., but I then found the ongoing costs associated with TP were too expensive V the performance. I now manage my own funds, they are not TP funds. I am happy to pay for advice as and when I need it.

Haven't found anything on the total value of funds under management either.

(Oh. There's someone on there discussing taking his potentially £30kpa pension out of the BT scheme and giving it to TP. Must be desperate to get his hands on the 25%?).

[Silly Car]

I've started the ball rolling with True Potential. Transferring final salary schemes to a investment firm who manage it for a %. You ask for a ' transfer value ' from your pension administrators and this can be invested. It's also a drawdown so can withdraw as and when you want.

You will get a larger lump sum and more flexibility, but when it's gone, it's gone. They monitor your investment and move it when necessary. Your basically paying them to make you money.

The risk is up to you, low, med, high. These pension investments don't have the safe gaurd like a final salary scheme but with the flexibility and larger lump sum, seem like an attractive option. Imo.

https://www.tpllp.com/?visit=main

If that is how TP have explained the risks and benefits of transferring from Defined Benefit pension* to a defined contribution pension, then good luck… Higher tax free lump sums are not a given nor is a better overall outcome.


* I am a DB transfer specialist of 20+ years experience and they fill me with dread. My last case has just been completed following 5 months of number crunching, analysis, correcting the scheme administrator on their errors and justifying why it would be the wrong thing to do anything but transfer rather than remain in the scheme. The client did have a unique set of circumstances which tipped the balance to transfer.

TP are a collection of individual planners with centrally managed resources, there are good, bad and indifferent people there. Irrespective of how good any planner (me included) reckons their investment managers are, when the markets slide, they slide for everyone unless Amazon are doing specials on crystal balls…

[David]

Try living on a state pension...about £640 a month for me and similar for Penny...only now we dont get pension credit as we are about £50 over the cut off...which results in a 2.5k council tax bill.....

[Dodgy69]

I've started the ball rolling with True Potential. Transferring final salary schemes to a investment firm who manage it for a %. You ask for a ' transfer value ' from your pension administrators and this can be invested. It's also a drawdown so can withdraw as and when you want.

You will get a larger lump sum and more flexibility, but when it's gone, it's gone. They monitor your investment and move it when necessary. Your basically paying them to make you money.

The risk is up to you, low, med, high. These pension investments don't have the safe gaurd like a final salary scheme but with the flexibility and larger lump sum, seem like an attractive option. Imo.

https://www.tpllp.com/?visit=main

If that is how TP have explained the risks and benefits of transferring from Defined Benefit pension* to a defined contribution pension, then good luck… Higher tax free lump sums are not a given nor is a better overall outcome.


* I am a DB transfer specialist of 20+ years experience and they fill me with dread. My last case has just been completed following 5 months of number crunching, analysis, correcting the scheme administrator on their errors and justifying why it would be the wrong thing to do anything but transfer rather than remain in the scheme. The client did have a unique set of circumstances which tipped the balance to transfer.

TP are a collection of individual planners with centrally managed resources, there are good, bad and indifferent people there. Irrespective of how good any planner (me included) reckons their investment managers are, when the markets slide, they slide for everyone unless Amazon are doing specials on crystal balls…

Some company pension schemes also allow you to access your state pension, sort of, through a lone type arrangement at 55yo. But you don't get the increase at your nrd, 67 for me. Lots to think about and look forward to for everyone.

[weeksy]

So i got a mail/letter from my pension guys. They are now in the process of moving some of my contirbutions into a less risky scheme/portfolio than i've previously gone for. This is because i've now hit 50 years of age, so they manage your risk and put it in safer places.

I've never really given much thought to where mine goes in terms of the availaible funds so i think it's time to speak to someone a bit more professional than random thoughts just in my head.

So i'm assuming that person is an IFA.... How exactly do i find one of them and how do i know how much he/she does or doesn't know....

[Count Steer]

So i got a mail/letter from my pension guys. They are now in the process of moving some of my contirbutions into a less risky scheme/portfolio than i've previously gone for. This is because i've now hit 50 years of age, so they manage your risk and put it in safer places.

I've never really given much thought to where mine goes in terms of the availaible funds so i think it's time to speak to someone a bit more professional than random thoughts just in my head.

So i'm assuming that person is an IFA.... How exactly do i find one of them and how do i know how much he/she does or doesn't know....

Is there a particular reason you don't want it in the risk tapering fund mix that they will put it into? They will generally do this gradually anyway. With mine I just gave them a planned retirement date and they gradually moved it into bond and cash funds over 10-15 years...which I could then move into a SIPP when I wanted to do the actual pension thing.

PS You can probably ask them not to do the risk reduction thing and leave it in growth funds if you wanted to.

[Mr. Dazzle]

You can probably speak to a Pensions Advisor through your work scheme.

It won't be independent of course - in fact they will probably tell you up front they can't actually give you advice! - but it will at least be free

[Dodgy69]

www. Money helper formerly known as pension wise is worth a read and have a list of ifa.

I've been getting my pension stuff together the last few months, it takes time and care. One nice surprise that others may also have, is when I was in my early 20s I worked for a company for 5 1/2 years. I paid in a total pension contribution of £5500 in those year's. At 55yo that's a pension for life of £900 a year's or £17 a week. I asked about a "transfer value" a payout to take it off their hands and that came up at £105 000. So a 5500 contribution turns into 105 000. Not a bad return.

Always ask about all your options.

[Mr. Dazzle]

The same maths which makes mortgages shit makes pensions great

[Potter]

www. Money helper formerly known as pension wise is worth a read and have a list of ifa.

I've been getting my pension stuff together the last few months, it takes time and care. One nice surprise that others may also have, is when I was in my early 20s I worked for a company for 5 1/2 years. I paid in a total pension contribution of £5500 in those year's. At 55yo that's a pension for life of £900 a year's or £17 a week. I asked about a "transfer value" a payout to take it off their hands and that came up at £105 000. So a 5500 contribution turns into 105 000. Not a bad return.

Always ask about all your options.

This is also why I think pensions are shit, you tie up 100k of your money and it gives you £17 a week back.
If you'd have put it somewhere else with the same compound growth then you'd have at least that amount to spend however you see fit, whenever you want - which you might have anyway if they'll just pay it out to you, but I suspect not.

I've looked at dropping a big sum of money into a pension now, but they really don't do you any favours, they still need to make money off it themselves and balance the risk of you living to be 100yrs old, so the return is crap, I'd rather just have the money in my account and worry about it running out before I die.

You could argue that if you start when you leave school then you don't notice the money drip feeding in, but if you took some time and drip fed the money somewhere else it would be a lot more flexible. Pension companies are out to make money, not help you.

[weeksy]

You could argue that if you start when you leave school then you don't notice the money drip feeding in, but if you took some time and drip fed the money somewhere else it would be a lot more flexible. Pension companies are out to make money, not help you.

but your employer is unlikely to do their part too, so arguably you've still got more ?

[Cousin Jack]

Final salary schemes have one HUGE advantage. If the pot is too small the employer has to pick up the tab. The market risk of the pot not performing well, or even shrinking stays with the employer, with a defined benefit scheme it is YOUR risk.

That is the very good (from an employers perspective) reason why final salary schemes are very rare today.

[Mr. Dazzle]

Doing a pension long term over your career has two BIG advantages.

1) Your employer pays in too! It's free money. I suppose you could argue for a higher basic salary instead, but since they're legally obliged to pay in and offer you a pension you might as well take 'em up on that.

2) You get tax relief on the money you put in. Again, free money! The money I put in my pension is essentially boosted by 40% over what I'd put in a bank. Of course, I'll pay tax on the pension income later in life. Which is why I split between pensions and ISAs, it's essentially trading "tax now" against "tax later" and there's no one right answer there.

With regards to putting lump sums into pensions right now....can't help you there, I'm not at that stage in life

[Count Steer]

£900 pa is roughly 9% return on capital. You can, of course, invest the 900 and not spend it to increase the return. If you dipped into the capital each year at the same rate (and spent it) your return would drop each year and it would be gone in 11-12 years. The money that went in was tax efficient and if the company pays in it's even better. Company pensions have their place (as does State pension) but are getting poorer with the loss of final salary pensions. Ordinary annuities are a bit pants at the moment though.

Probably best (for most people) to have a mix of self-invested, accessible funds underpinned by State and Company pension if possible. IMO of course, others may differ.

[Potter]

but your employer is unlikely to do their part too, so arguably you've still got more ?

Yeah you're right, I forgot that bit, although unless you're in the public sector, or in one of the companies that pay a generous amount, then I think it's getting less attractive?

[Potter]

£900 pa is roughly 9% return on capital. You can, of course, invest the 900 and not spend it to increase the return. If you dipped into the capital each year at the same rate (and spent it) your return would drop each year and it would be gone in 11-12 years.

I can't disagree, but £17 a week is functionally useless, you'd be a lot better off with £100k in the bank, it might run out, but £17 a week will run out by Monday lunchtime.

[Count Steer]

£900 pa is roughly 9% return on capital. You can, of course, invest the 900 and not spend it to increase the return. If you dipped into the capital each year at the same rate (and spent it) your return would drop each year and it would be gone in 11-12 years.

I can't disagree, but £17 a week is functionally useless, you'd be a lot better off with £100k in the bank, it might run out, but £17 a week will run out by Monday lunchtime.

True but it was an example using the figures from an earlier post. If it was paying £50k pa the capital sum looks very juicy but the guaranteed £50k pa for life looks attractive too. (If you are healthy and avoid dangerous activities ).

[Potter]

True but it was an example using the figures from an earlier post. If it was paying £50k pa the capital sum looks very juicy but the guaranteed £50k pa for life looks attractive too. (If you are healthy and avoid dangerous activities ).

I suppose that's where the drip feed and your employer matching your contributions wins for most people.

If you can drip feed money in before tax so you don't really notice it so much, then when you retire come away with £50k a year, most people would go for it - tbf I would as well, but I moved about too much to stick to one pension.

[v8-powered]

So i got a mail/letter from my pension guys. They are now in the process of moving some of my contirbutions into a less risky scheme/portfolio than i've previously gone for. This is because i've now hit 50 years of age, so they manage your risk and put it in safer places.

I've never really given much thought to where mine goes in terms of the availaible funds so i think it's time to speak to someone a bit more professional than random thoughts just in my head.

So i'm assuming that person is an IFA.... How exactly do i find one of them and how do i know how much he/she does or doesn't know....

Lifestyling they call that apparently - when you reach a certain age they start investing in lower risk funds to cover their arses. My missus took over control of my investments that aren't final salary and manages them on a month-by-month basis and gets decent returns.

Would certainly recommend professional advise - worthwhile paying someone to manage it than take advice from the interweb or your company pension administrator (mine is free though as missus specialises in pensions and investments )

[Mr. Dazzle]

I can't disagree, but £17 a week is functionally useless, you'd be a lot better off with £100k in the bank....

...but I moved about too much to stick to one pension.

It's the old question though innit, "when do you plan on dying?". If you retire at 60 with £100k and then live to 80 you could spend about £90 a week and run out of money on the day you die. That's not that much is it? And what happens if you live to 90? Then again, if you live to 64 you'd have been better of with £100k's worth of drugs and hookers.

Until last year I had 8 pensions from only 10 years of work. I'd changed jobs a couple of times and my employer had been bought out more than once. It's an absolute doddle to consolidate them these days.

Lifestyling

"Glidepath" is the other one.